A little background re millionaire households: One commenter wonders if there was an effect from the changing housing market. First, the Claritas data are from 2006, long before the housing market tanked. Second, it says its calculation of income producing assets (IPA) does not include home equity. Third, we track this trend based strictly on the internal order of the rankings, not on the actual number or share of households from metro to metro, which is NOT comparable from 2005 to 2006. Nonetheless, here is Claritas' explanation of its formula:
Over the past three years, homeownership rates and home values have increased, causing a decrease in IPA. Households have been using income-producing assets for housing down payments, home purchasing closing costs, and mortgage payments. These housing costs come out of IPA and eventually move into home equity, and home equity is not part of the IPA model. Additionally, IPA is based off of a three-year average of survey results. This year’s three-year average no longer contains the impacts of 9/11 and the slight recession that followed the attack. Finally, the baby boomers are nearing retirement age. As this group retires, the growth of IPA will slow as the boomers tap into their retirement nest eggs. Furthermore, their incomes assets are going to be declining, as well as their IPA.In recent years, the higher IPA distributions have been gradually shifting away from representative survey results, and in 2007, it became clear that it was time to redistribute the IPA ranges so they better reflect the reality today. Claritas’ distribution realignment is a result of two consecutive years of national financial survey results displaying a similar story. Additionally, federal sources such as the Internal Revenue Service, Bureau of Labor Statistics, and Census Bureau are issuing reports with similar findings in the change of assets across the nation.
